This paper, which can be found here, seeks to portray the challenges that might arise regarding unilateral practices as a result of the deployment of blockchains. It is structured in three parts: The first section details how unilateral practices can be implemented on blockchain and draws a risk map. It begins by describing how the blockchain works. This was already described in my reviews above, but it is worth pointing out that the author places some weight on the existence of two main forms of blockchain: public blockchains, also called permissionless or open blockchain, and private blockchains, also called permissioned blockchains. The main difference is that in the latter the permission to access the contents of the blockchain may be restricted to certain participants only. In practice, semi-private and private blockchains can have a multitude of access levels. The paper then turns onto conditions for the enforcement of competition law against unilateral practices. It begins by noting that there are…

As reviewed in last week’s email/posts, the U.S. Supreme Court recently found that American Express’s ‘anti-steering’ rules did not violate U.S. antitrust law (in a decision reviewed here). In its judgment, the Supreme Court addressed a variety of topics essential to antitrust analysis – market definition, two-sided markets, harm through price effects and output effects, cross-market efficiencies and ancillary restraints – in ways which are at odds with the European approach. This paper, available here, seeks to compare the EU and US approaches in this respect. It is structured as follows: Section three contains a comparison of the AmEx majority and dissenting opinions. In the interest of clarity, I will review it here, instead of following the paper’s structure. In Ohio v American Express, the majority held that only one market should be defined in two-sided transaction markets. Because there is a single relevant market, cognisable harm must refer to net harm across merchants and cardholders. Even demonstrating that the benefits…

This is a UK judgment by the Court of Appeal concerning the correct approach to payment cards’ interchange fees. The decision was issued on appeal from three different lower court judgments that focused on whether the setting of default multilateral interchange fees (“MIFs”) within the MasterCard and Visa payment card systems amounted to an anticompetitive collusive practice. It is important to begin by describing the factual background of all these cases. Unlike American Express, or the card system at stake in the US Supreme Court judgment discussed above, MasterCard and Visa are four-party card schemes. Such schemes work as follows: a merchant accepts certain credit and debit cards pursuant to an agreement with an “Acquirer”, i.e. a bank or financial institution belonging to the MasterCard or VISA scheme. The card will have been issued by another bank belonging to the scheme (the ‘Issuer’). The Acquirer will charge a fee to the Merchant for the services it provided in respect of a…

This Report, which can be found here, provides an interesting overview of potential competition issues in this sphere, while acknowledging ‘the discussion about the competition problems is still hypothetical‘. Even as I am unable to summarise the (136 pages) Report, it is worthwhile emphasising that the authors believe that the application of competition law to potential anticompetitive behaviours in the FinTech sector faces several challenges, the most relevant being the difficulty in applying existing tools and methodologies to new market phenomena such as: (i) many providers operating in multi-sided markets, with concomitant difficulties in terms of market definition and identifying market power; (ii) the possibility of network effects operating as barriers to entry, together with restrictions on interoperability and the adoption of standards; (iii) the role that access to data can have in restricting competition. As far as it goes, these observations are in line with widespread concerns about digital platforms more generally – and with the recent report on the…

Ohio v American Express involved the use of what are called “no steering” restraints, in which a retailer is not allowed to use a variety of tactics to steer a consumer away from using an American Express (“Amex”) card and towards using another payment mechanism, such as money or competing payment cards. The reason why a merchant might want to do this is because the cost that the merchant incurs when a customer uses an Amex card can be higher than when the customer uses another credit card, debit card or cash. Although not challenged in the case, the Amex contractual rules also prevent a retailer from imposing a surcharge on customers who use an Amex card to reflect the higher merchant cost. The contractual clause at stake in this case was a type of vertical most-favoured-nation (‘MFN’) restraint, i.e. a restraint in which one supplier tells a retailer that the retailer cannot set the retail price of its product…

This article, available here, argues, contrary to the arguments made in the piece above, that the Supreme Court decided the Ohio v American Express case correctly. Multisided platforms have distinct and critical features that set them apart from single-sided markets. Any prima facie antitrust assessment of competitive harm must incorporate the impact on consumers in all sides of a market regardless of market definition, and output effects should be the primary emphasis of any such competitive effects analysis. The paper is structured as follows: Section 2 identifies two broad schools of thought on market definition and competitive effects for multisided platforms. There is a divide among antitrust practitioners, courts, and economists regarding how multisided platforms should be assessed in antitrust investigations. A first school advocates for a separate effects and markets’ approach. Because users on different sides of a platform have different economic interests, it is inappropriate to view platform competition as being for a single-product offered at a single (i.e., net,…

This paper argues that the recent Supreme Court decision in American Express v Ohio is misguided. It is available here. Platform competition creates challenges for antitrust, but does not warrant the upheaval of the antitrust laws that the Supreme Court’s majority opinion prescribed. Instead, the traditional rule-of-reason approach is much better suited to deal with such cases. The paper is structured as follows: The paper begins by providing an overview of the distinctive features of platforms and platform competition, as reflected in the platform economics’ literature. There is no universally accepted definition of a two-sided platform, since multi-sidedness is a matter of degree. The economic literature identifies various types of platforms, such as: (a) transaction platforms, i.e. platforms that provide instrumental value by facilitating transactions between the two sides of a market; and (b) media platforms, where the two-sides of a platform comprise consumers of content and advertisers. It is sufficient here to describe a two-sided platform as a firm that (a)…

The Google Shopping case raises many important questions, such as: how do we deal with the leveraging of market power in digital markets? How do we weigh the benefits to consumers against the potential harm to competition? And, lastly, what are the appropriate remedies for this type of behaviour? In addressing these questions, this paper is structured as follows: A first section describes the background to the Google Shopping decision by the European Commission. Google aggregates, sorts, displays and provides direct access to retailers’ webpages in exchange for a fee through Google Shopping. Other online platforms, including Nextag, Foundem and Shopzilla, offer similar services. However, until early 2018 ‘while competing comparison shopping services can appear only as generic search results and are prone to the ranking of their web pages in generic search results on Google’s general search results pages being reduced (‘demoted’) by certain algorithms, Google’s own comparison shopping service is prominently positioned, displayed in rich format and is…

According to the authors, the European Commission in its Google Shopping case did not outline which theory of foreclosure justified its finding of infringement. Likewise, there is no consensus in the literature about which theory of harm may best justify the decision. In the light of this, the authors seek to develop such an economic and legal theory of harm in this paper, which can be found here. They argue that, by tying its search and shopping platforms, Google became able to serve customers with whom it would have not dealt otherwise. However, this may divert trade from potentially more efficient vertical platforms. By tying its shopping search to its general search service through visual prominence, Google can attract additional advertisers on its search platform that would otherwise have possibly advertised on competing search platforms. Thus, the effect of tying is a restriction on competition in vertical search that deserves antitrust scrutiny. The paper is structured as follows: Section 2 reviews the…

The Google Shopping decision was said by the Commission to be “a precedent which establishes the framework for the assessment of the legality of this type of conduct”, i.e. the use of a dominant platform to favour one’s own ancillary service. Despite this, in 2018 Google launched a new service, Google for Jobs, for the matching of job seekers and employers in Europe. This article, available here, examines whether the manner with which Google is presenting its new Google for Jobs service on its general search results pages complies with the precedent set out by the Google Shopping decision. The paper is structured as follows: Sections II and III provide some insights into search and search bias, and reviews the European Commission’s Google Shopping decision. Upon a user’s query in Google Search, Google’s general search results pages generally produce three different categories of search results: (i) Generic Search Results, (ii) Specialised Search Results and (iii) AdWords Results. The likelihood that a user…